Explosive Letter from SC V.Chairman Mr. VASAN

 THE RESERVE PRICE –LACK OF CONVICTION AND 14TH S.C.MEETING MINUTES 

(I HAVE EDITED OUT THE FULL NAMES EXCEPT FOR VASAN)

Some members of SC wanted me badly out of the SC in the 14th SC meeting on the grounds that I broke the code of “ their “conduct by addressing some concerns on the issue of current RP to SPs on their “sacrosanct” RP. They did not hesitate to break the law, or claim authority more than what the law of the land confers on SC, to expel me, instead of addressing some concerns of some SPs ,be it few or many . I was troubled when they said in the last SC meeting that sharing some thoughts on RP to the Sps is almost an unpardonable crime, when “SC” has fixed it. I have all along assumed SPs are the ultimate authority in collective sale .Prior to that, some bedlam was created in SC ,while the issue was keenly discussed with a receptive MA . I was sent taunting emails ( which I do not wish to publicise for sake of maintaining the dignity of TC SPs) ,perhaps expecting me to resign on my own. When I stood my ground , they did not mind disgracing themselves with an unlawful act which they were bound to withdraw. I am not surprised that they that they have chosen not to put up the minutes of the 14TH SC meeting on the notice boards to notify the nullification of their illegal decision, even after two weeks ,though Strata Title Act requires that the Minutes must be put up within seven days, as it would expose their folly to SPs at large. But I bear no personal grudge as I have to bear my cross . 

As I have received several calls for many SPs on above issue , I owe it to SPs to explain the background and circumstances to clarify the matter from the proceedings/correspondence of SC itself. 

The issue is not about my presence or continuance as SC member –that decision is only the prerogative of SPs ,but getting RP right to the extent SC can . I had some concerns in this regard, and had voiced it in SC meetings since last year. Be that it may, was I only the person in SC who sought a relook at the RP ? Not at all !! Let me give a brief recount of the SC discussions on RP since circulation of CSA : 

Note : The extracts in red are reproduced from the emails of respective members/MA: 

On 20.05.2016 , Mr. G L, Secretary of SC wrote to Huttons seeking evaluation of The RP with reference to the sale of Shun Fu .I wrote to Mr.G on 29.05.2016 when the approval of CSA draft was under consideration by SC: 

Quote 

“Dear Mr. G 

Thanks for your efforts . I am really sorry I could not be in touch with you on revised CSA etc as I had to travel again since last Friday after my return from Dubai on 25th. I am now in Penang and returning on 31st night. 

As regards your comments on RP vis a vis Shun fu , I refer to my comments in the last SC meeting on RP arrived at by Sc and the absence of critical examination of a detailed residual land value analysis by the Sc so far. In any case ,it will be advisable to have any proposed presentation of analysis at the EOGM by SC members .before it is formally put up at EOGM .” 

unquote 

In response to this email , Huttons replied as under : 

Dear G, 

Thanks for your prompt action in revising the agenda for the impending EOGM. 

The proposed Reserve Price (RP) was indeed one of the key criteria for the selection of Marketing Agent during the last EOGM held at SAFRA Tampines. However, the RP may be reviewed on the basis of prevailing property market condition during the course of the collective sale process. 

With regards to Mr Srinivasan’s email sent yesterday on the reduction of RP, I had replied in my previous email sent to all parties concerned on 17th March 2016. I remembered Francis had mentioned during our first presentation to the CSC that the RP was not the key consideration for the selection of Marketing Agent. He said that the proposed RP has to be realistic and achievable. Thus, we had adjusted the RP in accordance with the probable market changes as we foreseen the property market would be running into headwinds amidst the global economic uncertainties. 

Thanks & Best Regards, 

Terence Lian 

Mr.G wrote again to Huttons on 10.06.2016 drawing their attention to the comments on the derivation of RP by some SPs in TC enbloc website and requested them to address the concerns . 

On 17.06.2016 ,I requested Huttons to clarify their working on RP assuming some parameters in the absence of detailed derivation analysis to SC 

( The Residual land analysis was never given to SC in writing and SC did not have occasion to analyse it critically except listening to the figures given out in EGMs). 

Huttons replied to both Mr.G and me stating that our inquires will be addressed at the EGM on 25.06.2016. 

Finally.SC decided to have a meeting with Huttons on 20.06.2016 to discuss on the RP After considerable discussions , Huttons informed SC that they need two days’ time to decide on the request for restoration of the RP to their FIRST ESTIMATE on 14.11.2015 as proposed by me. (Higher by about SGD XXMN) 

Huttons the wrote to SC on 21.06.2016 stating that they have decided to keep it at same level for several reasons ,all of which have been circulated in their communications to Sps in the last two months 

With reference to the discussion on 20.06.2016, and above response , there was an exchange of views amongst the five SC members ,who attended the meeting ,and their opinion /comments were as under : (Two members Mr.CYS and Mr.TKS could not attend the meeting ) –extracts from emails are in red : 

1. Mr.TWW (Email dated 21.06.2016) 

Quote 

“The point was raised at our meeting that a too low reserve price may cause buyers to try low also, or try not as high as they otherwise would, thinking that the low, 'reasonable' pricing signals eager, "fire" selling (due to, say, panic over ageing estate, etc.). Huttons' point 4 seems to say that the real value of Tampines Court "exceeds" the reserve price they recommend. Should they then not agree with us to improve the reserve price? Buyers, as they said at our meeting, will do their homework, and will thus see the "real value" Huttons' point 4 assert. Why then should genuine buyers be discouraged from bidding if we raise the reserve price to accord with the "perceived" true value? In uncertain market conditions such as at present, and with the large land area of Tampines Court which discourages single buyers, interested buyers may "corner the market" by forming a consortium, hoping to be the only bidders for a cheaply priced enbloc. “ 

Unquote 

2. Mr.TF: ( Email dated 21.06.2016) 

Quote 

“Dear All 

My contribution on point 2 relate to the construction cost that cannot be one part of the issue derived in the increase of construction costs of its location and site constraint as mentioned by Mr Terence has no basis. 

Further from Dr Tan & Mr Vasan notes that gave me the insight a better overall episodes that concluded the MR Terence respond not convincing. 

I am in the opinion that the RP should be reinstated to SGD YYYYYYYY MN ,and may I have individual consensus as we need to reply not later than 22/06/2016. 

Thanks and Warmest Regards 

TF“ 

Unquote 

3. Mr.GW(Email dated 22.06.2016) 

Quote 

I have no objection, as I stated during the meeting, to the RP being XXXMn or YYYMn. and will follow the SCs majority consensus. 

The first objective of any RP has to be that we need to get the 80% signatures. Without this everything falls flat. However if we do get 80% with the ………figure and get no bids or serious offers then again everything falls. 

We have to weigh these two factors. If we can get 80% AND serious bids at this level during the tender then its a dream come through. 

I repeat, I have no objection to either RP figures considering the above. 

Unquote 

5.Mr.GL( In his email dated 22.06.2016) – 

Quote 

Dear all, 

My opinion are as follows: 

1) How will the calculation worked out if we were to adopt XXX as the reserve price, maybe Mr Vasan can help work it out and hope that we can have a better resolution on whether is the price realistic for any buyer. No point having 80% and there is no buyer. I would also like to bring out the point that after some favourable news regarding Enbloc sale, there are news reports that there are indeed other enbloc sites that will be available in the market. 

2) By changing the reserve price now, it will show that the SC did not really deliberate on the previous RP with the MA. It's a short time frame from the last EOGM till today. 

3) Although I have no objections to raising the RP, the new value should be work out together with the MA, with realistic working. Example by raising the selling price of the new development to say $1150psf. 

4) However, my preference will be to go with the RP of XXXX MN, see the response of SPs, raising the RP to a realistic, achievable amount if required. If we are able to get 80% for $XXXXMN, then hope that we will get a bidding war and get a higher price (safeguarded by the valuation), if the market really picks up and TC hold its true value based on its tangible and intangible benefits. It is easier for the SC to raise the RP rather than to lower the RP after a lower bid comes in. 

For your consideration. 

Regards, 

G

Unquote 

I have reproduced the above correspondence which to show that three out of five SC members (including the Chairman) unequivocally opined that RP ought to be increased after the meeting on 20.06.2016 and other two agreed in principle but differed in their perception of the issue. In any event, after some more exchange of views when Mr.G and Mr.Ge opined that it would be advisable NOT to increase RP at this stage , Mr.TF, Chairman ,chose to write as under, on behalf of SC, to MA that SC agrees to leave the RP unchanged. As such , I wrote to him as under on same date : 

Quote 

“Dear Mr.TF

Thank you for your email of date. 

You may advise Huttons that the Sale committee ,barring one member , has no objection to their presentation of derivation of the RP. It may NOT please be conveyed as a unanimous decision . My dissent may please be recorded in SC minutes . 

thanks and regards 

vasan " 

unquote 

I leave it to Sps to judge from foregoing correspondence whether I was the lone voice to see review of RP. 

While no one doubts the professionalism and integrity of any MA, it is a fact that price in enbloc sales always present a difficult proposition with a known RP unlike Government land sales Sps following the enbloc process , may note that during Round II in 2011-12 , one of the MAs out of five , who rank perhaps as number one in enbloc sales with many big projects , presented first with an RP of SGD 700mn , which was raised by themselves to SGD 800MN within a span of two months when SC found their derivation to be too conservative. Huttons has admitted that the future commercial value of TC after redevelopment will exceed current RP ,but they say as a marketing strategy , RP has been kept lower to attract competitive bids. In another context , they say RP has been fixed taking into account the global economic uncertainties ,and the views of SC Chairman then –when in fact enbloc sale price is not about present market, but about potential market few years down the road . I do not know what sustains but the strategy of lower RP ,but may prove to be self- defeating in a collective sale. 

In a way, I am glad that Huttons has called for a meeting with Sps to clarify on the issue of RP .I hope they will address the genuine concerns on RP, rather than use it as an occasion to convince Sps to sign at current RP . 

It is now the call of the SPs - 

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